GATX (GMT)

GATX Corporation (or GATX), headquartered in Chicago, Illinois, leases rail equipment, engages in specialty finance, and owns and operates a fleet of self-loading vessels on the Great Lakes through its wholly owned subsidiary, American Steamship Company (ASC). A technology subsidiary, GATX Technology Services, was sold in 2004, and an aircraft leasing subsidiary, GATX Air, was sold in 2006. GATX now operates through three primary business segments: GATX Rail, accounting for 70% of 2007 revenues, American Steamship Company generating 21%, and Specialty contributing 9%. GATX's long-term debt ratings are Baa1 by Moody s (upgraded from Baa3 in December 2006) and BBB+ by S&P (upgraded from BBB in January 2007).

GATX Rail primarily provides full-service leases, under which it maintains the rail equipment, to the following industries: chemical (29% of 2007 rail revenues), petroleum (29%), agricultural and food processing (13%), railroads (11%), and other (18%). With an owned and leased worldwide fleet of about 132,000 railcars at yearend 2007, the majority (roughly 85%) are in North America, with the balance in Europe (Austria, Germany, Poland, and Switzerland). In addition, the company had an ownership interest in 28,000 railcars and managed an additional 4,500 railcars for third-party owners.

The average age of GATX's fleet is approximately 16 years in North America and 24 years in Europe, with railcars having useful lives of 30-38 years. GATX typically leases new railcars for five-ten years, with extensions of existing lease averaging five-seven years, and the average remaining lease term at 4.5 years. GATX purchases new railcars from a number of manufacturers, including Trinity Industries, Union Tank Car Company, Freight Car America, National Steel Car Ltd., American Railcar Industries, and The Greenbrier Companies. Principal leasing competitors in the U.S. include Union Tank Car, General Electric Railcars Services, Helm Financial Corporation, and National Railway Equipment Corporation in North America, and VTG Group, CTL Logistics Group, Ermewa, and Orlen Koltrans in Europe. GATX Rail had $5.0 billion in assets at December 31, 2007, including $1.2 billion that are off balance sheet. The company's owned fleet accounts for 20% of tank cars in North America and 4% of freight cars.

Specialty is primarily focused on providing leasing and related remarketing and asset management services in the marine and industrial equipment markets. At December 31, 2007, Specialty owned assets of $521.4 million, of which approximately 47% were marine assets and 24% were industrial equipment assets. In addition, GATX manages portfolios of assets for third parties ($378.1 million), and is involved in joint venture investments for various types of equipment that require a high level of expertise, including aircraft, power generation, and rail and marine equipment. GATX sold its venture portfolios in the U.K. and Canada in 2003, with the remaining book of business liquidated by yearend 2005. Competitors include commercial banks, leasing companies, lease brokers, and investment banks.

American Steamship Company (ASC), with $292 million in assets at December 31, 2007, operates a fleet of self-unloading vessels for the transportation on the Great Lakes of dry bulk commodities, including iron ore pellets (47% of 2007 volume), coal (35%), limestone (16%), and other ( 2%). ASC typically operates under transportation agreements that range from one-fifteen years for companies within the steel production (49% of 2007 volume), electric utility (34%), construction (11%), and other industries (6%). ASC is a major factor in this Great Lakes freight business, accounting for 38% of total Great Lakes freight capacity. Primary competitors Interlake Steamship Company, K & K Integrated Logistics, VanEnkevort Tug and Barge, Upper Lakes Towing, and Wisconsin & Michigan Steamship Company.

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